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What company is next after Oracle’s $1.5 billion purchase of marketing cloud vendor Responsys? Some company for sure. And the next buy will come sooner rather than later, analysts told CMSWire.
The Redwood City, Calif.-based software giant's latest acquisition comes during a time of industry transformation.
“Marketing will be an extremely rich area of merger and acquisition activity for the foreseeable future,” said Robert Brosnan, principal analyst at Forrester.
An Acquisition World
Oracle’s latest acquisition comes during a time of industry transformation. Multiple forces are converging: advertising and media, data and analytics, and consumer empowerment through technology, Brosnan said.
“These changes will continue unabated,” he added. “Even with all the consolidation over the last several years, there is plenty of room for investors and entrepreneurs to create marketing tech products” that will need to be acquired.
The digital marketing hub will include competitors in a game of “inches as opposed to miles,” said Julie Hopkins, research director of Gartner for Marketing Leaders.
“The spotlight remains on other providers of email marketing and marketing automation solutions -- folks like Marketo and Silverpop -- but also on some of the providers of targeted solutions in this space,” Hopkins told CMSWire. “Functional gaps still exist for Oracle, but also for other players knitting together a Digital Marketing Hub solution.”
The industry’s attention, she added, will likely turn toward providers in tag management, analytics or PPC bid management — “all areas known to be gaps for Oracle and others.”
What Responsys Does for Oracle
While the digital marketing world outside of Oracle/Responsys will feel the tremors of the deal, there are other issues to consider. For one, Oracle now has digital marketing capabilities in line with Salesforce, which made a $2.5 billion acquisition of ExactTarget last summer.
ExactTarget fit well into the Salesforce Marketing Cloud alongside earlier Salesforce scoop-ups BuddyMedia, Radian6 and Social.com. It allowed Salesforce to offer end-to-end digital marketing capabilities that integrate fully with all of the Salesforce CRM offerings.
If you recall, ExactTarget acquired Pardot in 2012 to add small business marketing automation capabilities to its own platform. That now gives Salesforce the ability address any-size business.
Oracle and Salesforce both now offer B2C digital marketing -- primarily email, but also SMS, push and web -- in addition to B2B automation, social campaigns and social listening.
It makes the two companies unique, Forrester's Brosnan said. Adobe focuses more on an end-to-end B2C digital marketing story, from acquisition to retention to analysis. IBM and Teradata are less focused, he said, on digital than on more traditional enterprise marketing management.
Oracle’s acquisitions in the past year address its core needs as a digital marketing hub provider, Gartner’s Hopkins added. It is signaling to the market and to those seeking a solution that it is committed to pulling together key functionality.
However, Hopkins cautioned, Oracle’s solution still has “functional gaps and differs in its strengths from others in the market.”
“The company has covered a lot of ground and its progress is consistent," she said. "This makes it a lead horse in the race, though integration and delivery will determine the eventual winners.”
Responsys and B2C
Responsys, though it offers multichannel orchestration capabilities, has built the core of its business around B2C email.
“B2C email programs often are based around the integration of diverse sets of customer data, in support of minutely segmented and targeted communications, that customers interact with across a myriad of devices,” Hopkins said. “B2C email, well executed, is built on some of the best practices of digital marketing today. This knowledge, plus support for text, social and web, will benefit Oracle, especially as they seek to grow their B2C customer base.”
Responsys helps Oracle offer digital marketing execution (messaging) and services (strategy, creative, etc.) to complement its infrastructure and analytics products, Brosnan said.
“The two will pair well, particularly for larger retail clients that rely on Oracle point-of-sale solutions or the Java programming language,” he added.
B2C – A Necessary Move?
Hopkins called the lines dividing what are typically considered B2B marketing tactics vs. B2C marketing tactics “increasingly blurry.” Each, she said, learn from the other and adopt tactics and technologies to improve their marketing returns.
“B2C marketers, however, tend to push the limits of tactics and technologies, and thus, a lot of tactics are first road-tested by marketers in this context,” Hopkins added. “B2B marketers require specialty support, which Oracle acknowledged with the Eloqua acquisition.”
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With Responsys, Hopkins said, the industry sees a nod to envelope pushing in areas less deeply leveraged by B2B marketers (e.g. social media, mobile).
Brosnan saw Oracle's need to integrate B2C as essential because, after all, Salesforce did it with ExactTarget. Oracle also wants to build a relevant, cloud-based business.
“Responsys helps on both counts, given that they typically compete with ExactTarget on enterprise digital marketing deals and are completely cloud-based,” he said.
Competition Landscape
The message for the competition among digital marketing providers is the same for digital marketers themselves: be agile.
“Certainly no one can be comfortable resting on their laurels, because the competitive landscape is constantly shifting,” Hopkins said.
Marketing automation provider Marketo, the 500-employee organization that recently scooped up real-time personalization web and mobile provider Insightera, serves B2B marketers and focuses on knowing and addressing the needs of marketers in this context.
“Perhaps in recognition of market shifts, they’ve begun to make moves to support B2C marketers as well with products like their Dialog edition,” Hopkins said. “Their job will be to continue to support the needs of their core market, and make the right moves to grow a B2C business, executing effectively despite all of the acquisition rumors that surround them, and expanding from here with the right mix of functionality. Easier said than done.”
And there’s always big fishes like 65,000-employee SAP and 11,000-employee Adobe that are in the mix.
As for 9,800-employee Salesforce, the challenge now is the same as 122,830-employee Oracle’s -- can they integrate it all in a way that works for customers?
“If not,” Hopkins said, “it’s just a grocery cart full of interesting ingredients.”
Salesforce declined commentary for this piece, and Marketo officials could not be reached. Oracle deferred to its previously-posted acquisition information when contacted by CMSWire.
But Salesforce CEO Marc Benioff did tweet this on Dec. 23, three days after Oracle announced the Responsys acquisition:
Heather Bellini wrote this am, "Oracle had organic cc license growth of -1% in F2Q14 vs. +1% in F1Q14."
— Marc Benioff (@Benioff) December 23, 2013 Brosnan said Oracle now competes on another front with Salesforce, though primarily in enterprise deals; ExactTarget has grown in enterprise deals, but the bulk of its clients are mid-market firms.
Brosnan believes the Responsys acquisition doesn't affect any dynamics with Marketo; there was no real competitive overlap between Responsys and Marketo.
